Legal versus equitable security interests

Copyright © 2025 LexisNexis

Published by a LexisNexis Banking & Finance expert

Practice notes

Legal versus equitable security interests

Copyright © 2025 LexisNexis

Published by a LexisNexis Banking & Finance expert

Practice notes

imgtext

Lenders will often take security as support for a borrower's obligations under a loan. Taking security means that they will have certain rights over the secured assets in the event that the borrower fails to repay the loan.

English law recognises four types of security interest:

•
mortgages
•
charges
•
pledges, and
•
liens

For an overview of each of these types of security, see Practice Note: Types of security; for information on mortgages, see Practice Note: Mortgages; for information on charges, see Practice Note: Fixed and floating charges; and for information on pledges, see Practice Note: Pledges.

This Practice Note explains:

•
the difference between legal and equitable security interests
•
which types of security can be legal and which types can be equitable (or both)
•
the key advantages of legal security
•
the key advantages of equitable security

Legal or equitable security?

The security interest conferred on the secured party will be either legal or equitable. Certain security interests can be either legal or equitable, some are always legal

Powered by Lexis+^®

Jurisdiction(s):

United Kingdom

Key definition:

security definition

What does security mean?

money deposited to ensure that the defendant attends court;

Popular documents

Do you need a deed of release as well as a DS1 to release a legal charge over land?

Do you need a deed of release as well as a DS1 to release a legal charge over land?Generally speaking, a deed of release is not necessary in addition to a form DS1 in order to release a charge registered at HM Land Registry.In the case of a legal mortgage of unregistered land, or a mortgage under

Taking security over receivables

Taking security over receivablesIn commercial lending transactions receivables are typically offered as security:•as part of a package of security over the whole of a company's assets (see Practice Note: Key features of debentures), and•in transactions where a steady stream of receivables forms a

What is the difference between an appeal and a review?

What is the difference between an appeal and a review?What is an appeal?An appeal in insolvency proceedings is no different to an appeal in normal litigation. An appeal will be allowed only if the appeal court is satisfied that the decision of the lower court was 'wrong' or 'unjust because of a

Late payment penalties—inheritance tax

Late payment penalties—inheritance taxWhile interest often accrues on overdue tax, the late payment of certain taxes may also attract a penalty. For information on the interest accruing on overdue tax, see Practice Notes: IHT—payment deadlines on death—Interest on IHT and Interest on late paid